Crosstown Commercial / October 5, 2020
Since COVID-19 gained national attention in mid-March 2020, the commercial real estate business has experienced challenge after challenge. In a world where commercial real estate investors have historically persevered, times have changed, and those changes have been extreme.
Business owners have paused many of their efforts in soliciting new site locations for their employees. Developers are experiencing construction delays which has left many wondering when work will be completed, if ever. Building owners are concerned that tenants will be able to make their lease payments. And even though the economy shows early signs of recovery, no one knows how long this pandemic will last and what the long-term economic ramifications will be.
Currently, commercial real estate investors are focused on helping portfolio organizations manage their costs and liquidity. Some investors are focusing their efforts on assets that will be more resilient, such as within the digital economy. Other investors are looking for valuation plays in getaway markets. And yet other investors are deciding to stay the course.
One thing, however, is consistent is that investors are relying heavily on asset managers that provide oversight between the daily operations of the location and the investor. Experienced asset managers have the skills and connections necessary to navigate through natural disasters and other catastrophic situations that can put an investment at risk.
The strongest asset managers are working to mitigate risks within their properties. This strategy provides investors with the peace of mind that rent is being collected, that properties are being maintained even with little to no occupiers in the office each day, and more.
Further, many investors are leveraging the low interest rates so that they can invest in new properties, and are even borrowing against the equity in existing properties. This stay the course strategy is not only lucrative, but provides investors with a leg up for when the economy starts to turn around. In many cases, hot properties that were once unavailable and not on the market, have become available again. The savvy investor in partnership with a skilled asset manager can scoop up those locations and take time during the pandemic to ensure the locations are ready for occupancy when the state of Minnesota starts to reopen its doors with less restrictions.
Finally, many investors are partnering with property owners and managers to help ensure tenants and their occupiers are well cared for through the pandemic. By ensuring employees have access to critical services and remain engaged, they are helping to reposition tenants for success once employees can return to the office in mass.
Though historically investors have managed from a distance, the nuances in today’s environment has created the need for investors to roll up their sleeves and help wherever they can. This additional support system will make it easier for tenants to pick up the pieces and continue forward profitably in the near future.